Valuable invest

pension scheme static

belongings flow

distribution

interest

savings

inequality

extent

56M ; « i (, >tdf rfl (tsron* c* Un t

stocks and shares store

to lend money to a company or bank in order to earn more money

how large or important something is

the way in which a supply of something, like money, is shared among people

money put somewhere for later use, for example in the bank

immobile, not moving unfairness

Wealth, income and inequality

What does it mean to he wealthy':The answer to this question varies from culture to culture. In the modernised, industrial world that we live in. wealth generally means all the collected ston of valuable things that belong to a person tor family, company or country). Wealth can include money saved in bank accounts, or invested in pension schemes. It can include land, houses or other property and valuable belongings such as works of art oi precious jewels Many people also own stocks and shares in companies. The various things that make up a person's wealth are often called и.чхег*.

So wealth is a static tiling. The term income, on the other hand, suggests aJlmc of money.Income is the amount of money that a person (or family or company) receives over a period of time. For most people, this means the salary they get for the work they do. However, there are other sources of income. < >ne source is government benefits, such as unemployment benefit or family support. Another source is rent from property and another is interest from savings.

Huge inequalities in wealth owned by individuals exist in many countries. Take the Tinted Kingdom for example. A fifth of all the marketable wealth is owned by just one per cent of the 1'K's population. That one per cent own over ^355 billion of assets. Figure 1 011page 56 shows how the rest of the I'tiitcd Kingdom's wealth is distributed. As you can see. the richest 50 per cent of the population own over 0Л per cent of the wealth. In other words, half the population own nearly all the wealth and the other half own only a tiny percentage. The chart also shows that the richest one per cent of the population ow n over a fifth of all the country's wealth

Large inequalities also exist in the distribution of income. The extent of these inequalities can be show n with something called the /.on us et/rtv. You can see an example in figure 2 below. The straight blue line shows perfectly equal distribution of income. For example, the bottom 2<" |vr cent earn 20 per cent of the total income The bottom 40 per cent earn 40 per cent and so 011. This is the ideal situation. The red curve, however, shows the real situation for the United

Kingdom. You can see immediately how far from perfect the distribution is. Half of the population, for example, earn just under a third of the total income. Move horizontally along the population line and you can see that 00 per cent of the Imputation take only 70 per cent of the total income. This means that the top ten per cent of the population earn nearly 30 |x-r cent of the country's total income.

^ В Comprehension

Now read the text again and match each paragraph with the correct heading.There are two extra headings that you don't need.

PARAGRAPH

PARAGRAPH 2

PARAGRAPHi

PARAGRAPH 4

How governments can create more equality Inequalities in income Inequalities in wealth What income is What wealth is

Why there are inequalities in wealth and income

Before you listen

Discuss the following with your partner.

Economic inequality also exists on a global scale. Below are some facts about global economic inequality. See if you can guess which figures from the box complete the notes.

^ ²/3 * 3 57 50 j

The lowest earning Americans have higher

incomes than (1) of the

world's population.

The world's richest (2) per cent

earn more than the combined income of the world's poorest (3) per cent.

0 1 1 1 1 1 1 1 r »

Ю 2030 40 M 80 70 ВС 90 100

fWlNtHI »' tin p«»»lst'3?

100

Figure 21 Distribution of mcom« in the UK :l.or«nz Curves

dntf'-boik¹'

The (4) richest people in

the world have incomes that are more than the combined incomes of the poorest (5) countries in the world.

В С Listening H)))

I Now listen and check your answers.

M ft <m 1 M л G и' ft vt aF л r «. . • : 1 57

Before you read

Discuss these questions with your partner.

-» What does poverty mean? Is there a way to define it?

-» How many people in the world do you think live in poverty?

-» Do you believe people 111industrialised countries live in poverty?

Й D Vocabulary

Complete each sentence with a word or phrase from the box.

absolute associate average corruption cycle define generation m natural disasters shelter trap

We high crime rates with poverty

and unemployment.

Having a a roof over your head, is

a basic need of humankind.

Hew does the dictionary this word?

floods, droughts, hurricanes and other are happening more frequently.

Giving money secretly to judges or politicians so that they help you is an example of

Hunters will sometimes set a

instead of using agun.

Let's hope the next finally put an

end to hunger and poverty.

The world's water supply is a which

mvolves the sea. rainfall and rivers.

If somebody lives in poverty, that

means they are completely without money to buy basic necessities.

The salary at that company is

very high.

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	Вми I	Г» у иц.д*«.
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r *

Poverty

Without a doubt poverty is a huge problem in the world today, figures suggest that three billion 14'opk or half the world's population live in poverty However, although we associate poverty with developing countries, poverty of some kind also exists in industrialised nations lor example, it is now thought that quite possibly one in every ten Americans lives in (xivertуHowever, poverty means different things to different people. How do economists define poverty?

' >11 e measure of [Poverty is absolute poverty. People live in absolute poverty when they live on or below the ftoverty line.This is a level of income that is so low that people cannot afford the basic necessities to live, such as food, clothing and shelter. According to the World Bank, these are people who are living on two dollars a day

However, there ate one billion people in the world who live on lessthan one dollar a day. The World bank defines this as extreme f*rccrty.

l ew people in industrialised countries li\e in absolute poverty, but many live in relative [Miverry.This measure of poverty takes into account the differences that exist in a population Ivfween the rich and the poor. For example, some economists say that people who earn less than half the average income live in relative poverty In llritain. this means 1 i million people.

Whv doespoverty still i-\ist'rThere is no single answer to this question. In developing countries, causes oi absolute |x>verty include natural disasters like droughts and floods, political corruption and war. However, in many cases people and whole populations - are caught in .1 trap- the poverty trap

I'eople on a low income spend everyllling they have on dailv necessities.They save almost nothing. In order to raise themselves out of poverty, they need education. This costs money. Kvcll when governments provide free schooling,tinpoor may not send their children because they need them to work These families cannot afford the cost of sending a child to school. Without education, the children cannot find better paid work. In this way, generations of the same family remain p< >or.

The same cycle that traps individuals can trap a whole j*>pulation Kconomic growth dejKiids on investment. Investment money conies from sav ings. Л nation that has almost no savings cannot grow economically. This keeps wages low. soagain |>cople cannot save and the cycle continues

^ E Comprehension

Now read the text again and answer the questions.

Poverty is ...

only found in developing countries, mostly in industrialised countries, found in both developing and industrialised countries

What number of people live in extreme poverty? three billion two billion one billion

How can relative poverty be explained? It takes into account that there are rich people.

It's a kind of poverty found in industrialised countries.

It's a kind of poverty only experienced in Britain.

What cause of poverty is tu>t mentioned in the text? war

lack of natural resources natural disasters Why can't people escape from the poverty trap? Because they refuse to send theu children to school.

Because they need any income their children can earn.

Because governments don't provide free education. According to the text, why arc countries often trapped in a poverty cycle?

There is no money for investment.

There are no schools.

The land is not good for growing crops.

Before you listen

Discuss these questions with your partner.

What do you think ares the possible results of living in poverty?

-* In what ways does poverty affect people's lives?

F F Listening Ц)))

Now listen and complete the notes. Health

Poor people (1) younger.

Life expectancy is (2) years

shorter.

(3) is more common.

Family

Teenage girls are more likely to (4)

5. ) are more common.

6. ) rates are higher.

Education and training

Mi i G t. 1 * t ► • 59

Children drop out of (2).. earlier.

No (8) at work.

G Speaking

Discuss this question with your partner.

Do you think it is possible to share wealth equally?

Give a two-minute talk on the subject of poverty.First read text 2 again and make notes below on the following.

ways of measuring poverty

striking facts about poverty in the world today

where pover ty exists

causes of poverty

how poverty affects people's lives

the poverty trap

! H Writing

Write a report describing the charts on pages 56 and 57.

First, read text 1 again. Then look carefully at figure 1 and figure 2. Use the outline plan to help you. Remember to include the following language:

The chart shows ...

It is clear from the figures that...

The majority of the population ...

A very small percentage of the population ...

about ' approximately almost

a quarter half / a third

In comparison ...

In contrast...

is owned by ...

earn...

Report

PARAGRAPH 1

Introduction.Say generally what the charts are about ■ use the titles to help you.

Begin like this:These charts show how wealth and income are distributed in the UK. Figure 1 shows ...

PARAGRAPH 2

Describe figure 1 in more detail. Say how

much of the wealth the top one per cent own. Compare this with the bottom 50 per cent.

Begin like this:Tigure 1 shows how unfairly wealth in the UK is shared out You can clearly see from the chart that...

PARAGRAPH 3

Describe figure 2 in more detail.Describe the perfect distributionshown by the blue line. Give examples from the chart. Describe the real distribution shown by the red line. Give examples from the chart. Say how much of the total income the lowest 40 per cent earn. Say how much of the total income the top 30 per cent of the population earn.

Begin like this:Figure 2 compares perfect distribution of income with real distribution m the UK. The blue line shows what happens if income is evenly distributed ...

PARAGRAPH 4

Conclusion.Explain briefly what the figures show about the UK economy.

Notes:

Pronunciation guide

Inequality 'mikwnbti Modernised 'iiHKbnai/d Precious piof.is Jewel '<: ;u:ol Lorenz curve (iJ.w кчл Poverty ртлн Associate'Л i о<л>|юи Corruption kor\pin Drought dtaul Flood fl.ul Schooling vkuilnj

Write 200-250 words

60 M j tm л• s.3и • 4 t; f ■' л г ;. m i U •> • t i'

devastating collapse fiscal policy

domestic

steady growth

monetary policy

recession

mechanism disposable income

interest

circulate

depression predictable

Before you read

Discuss these questions with your partner.

-> Micromeans small and macromeans large. What do you think macroeconomicsis?

-* How is it different from microeconomics?

A Vocabulary

Match the words and phrases with the definitions.

event workforce

something that happens

a method or tool for do;ng something

control of spending through taxation

money you have to spend after paying tax

L a serious slowing down of the economy

at a slow, unchanging rate

move around

control of the cost of borrowing and movement of money in economy

the members of the population able to work

something you know will happen

complete destruction

the cost of borrowing money

not foreign

a very bad period for the economy

Macroeconomics

In the 1930s one «>1 tlu worlds strongest economies suffered a devastating collapse. It was the American economy, and the disaster was the < «real Depression. The effect*, of the Great Depression were felt all around the world, and it brought about a change in eeonomie thinking Economists Ьсцап to realise that looking at the behaviour oi individual consumers and suppliers in the economy was not enough. Keoiiomists ami governments had t>> understand how tlu wliok economy worked. In other words, they had to have in understanding of macroeconomics

Microeconomics looks a I how the details of tin. economy work. Macroeconomics takes a few steps back and looks at the whole pieturi While microeconomics looks at supply and demand !<т a single product or industry, macroeconomics follows supply and demand patterns for the whole economy. Whereas microeconomics is about economic ev cuts <il himu .macroeconomics looks at how the domestic economy interacts with the economies of other countries

However, macroeconomics isn't only alxnil knowing what s happening in the economy. After the shock of the Great Depression, governments realised that an economy needs Ю be managed Most governments aim to have steady economic growth, to control inflation and to avoid recessions .histmanaging an individual businessisa hard enough task. How do you manage a whole economy? Governments have certaini>niIlliniumswhich help them to do this.

Tlit first ■>! tlu st mechanisms is jiscul j»>licy Fiscal policy refers to the tax system and to government spending. Ну increasing or decreasing the amount of lax people inusi pay. tin government can affect how much money jieoplc have available to spend {ttixjxisable inconu ). This, in turn, has an effect 011 demand in the market. By increasing or decreasing their own spending, governments can have .1 huge effect 011 tlu growth of the economy

The second mechanism is monetary }x>!icy.With its monetary {>o|iey. a government sets interest rates and also controls the amount of money that circulates in the economy. The interest rate the government sets inlliienees the rate that commercial banks set when tlu > lend money to customers Interest rates have a big impact 011 the economy For example, they can affect people s decisions about saving or spending money

The third mechanism is administratis aj>pr<»ich This is a range of tilings that governments do to increase tlu supply of goodsand services to the economy but without increasing prices There­in 1 numl>er of ways governments try to do this. For example, improvements in education and training can make the workforce more productive Investment in technology can make industry more efficient. < iovernraents can also change employment anil business laws to make tilt- market more competitive.

til Hii.iIIh 6ui4> to Cr««n»>c> U• 11 11

With a combination of these methods, governments try to .steer or guide the economy on a steady and predictable path. They aim for gradual economic growth and to avoid disasters like the Great Depression.

Now read the text again and answer the questions.

Which countries were affected by the Great Depression? only America just America and Europe the whole world Which of the following is interested in foreign economies? microeconomics macroeconomics both micro and macro economics The three different mechanisms which governments use are ...

all concerned with how much money people have to spend.

aimed at improving education and training, all different ways of managing an economy. Which mechanisms involve changing interest rates? fiscal policy monetary policy administrative approach Which mechanisms might involve creating job training schemes for school leavers? fiscal policy I monetary policy administrative approach What do governments want to achieve with their macroeconomic policies?

to predict what will happen in the economy to create steady economic growth to combine different paths for economic growth

Before you listen

Discuss the following with your partner.

You're going to hear about the Great Depression the worst economic recession in recorded history. Before you listen, see if you can put these events in the order thai they happened.

-» the economy began to recover -* companies produced more goods for funire demand World War 2 began

people started selling their stocks and shares -» the stock market crashed -» people lost jobs and farmers left their farms people borrowed money to invest in slocks and shares demand began to fall